The home secretary should lose the power to intervene on human rights grounds in extradition cases, an official judge-led inquiry has recommended.

The review of the extradition laws by a legal panel, chaired by the former appeal court judge, Sir Scott Baker, has taken a year.

It says the home secretary's role should be severely limited in extradition cases to remove any perception that decisions are taken for political reasons.

The US attorney general, Eric Holder, welcomed the Baker review's rejection of claims by the Liberal Democrat leader, Nick Clegg, and some leading Conservatives that the US-UK extradition treaty – in place since 2007 – is "lopsided" or unfair.

The review panel found no "practical difference" between the information or standard of proof required by both countries in extradition cases and said the "widespread perception that they operate in an unbalanced manner" is not justified.

Baker said there had been 130 US extradition requests to the UK under the treaty and 54 requests from the UK to the US.

Holder said: "The fundamental fairness of the treaty has been demonstrated by its application during the years it has been in force … The treaty has enabled us to work closely with our partners in the United Kingdom to pursue the interests of justice in both our nations."

The treaty is being used to send the alleged British computer hacker, Gary McKinnon, to stand trial in the US. The £250,000 inquiry rejected demands from McKinnon's supporters and parliament's joint human rights committee, who wanted a "forum bar against extradition" that would have allowed British courts to block extradition if a significant part of the alleged offence took place in the UK.

The 486-page report also said the controversial European arrest warrants were "operating broadly satisfactorily". But it presses for further steps to ensure warrants are not issued for minor offences.The report cites the 1,659 requests from Poland to the UK as being of particular concern. It adds that a seven-day limit for appeals against such warrants is causing injustice and needs to be doubled.

The review is also highly critical of delays at the European court of human rights that have left some extradition applications in terrorism cases unresolved for more than three years.

It cites the case of Abu Hamza, which has been before the Strasbourg court since August 2008, and that of Babar Ahmad, which dates back to 2007.

The home secretary, Theresa May, welcomed the report but it is thought unlikely that she will move to limit her powers to intervene in extradition cases.

McKinnon's mother, Janis Sharp, called the report a whitewash and said it flew in the face of commitments from senior Lib Dem and Tory politicians before the election.

Shami Chakrabarti of Liberty said: "We don't just disagree with this review but are completely baffled by it. This is not a court judgment, merely policy advice, and government cannot abdicate its responsibility to honour the promises of both coalition parties in opposition."

"Britain's rotten extradition system stinks of human rights abuse and rank hypocrisy. It's time we stopped parcelling people off around the world like excess baggage and remembered the duty of all governments to protect their people and treat them fairly."